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If the forward rate is less than the expected future spot rate, you should sell forward...

If the forward rate is less than the expected future spot rate,

you should sell forward

you should buy forward

you should not change your behavior

foreign interest rates will change

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Answer #1

Answer -
Option - You should buy forward is correct.
Explanation -
Forward exchange rate is the rate of exchange at which bank agree to exchange one currency for another at a future rate.It is helpful to banks,MNCs , financial institutions to enter in to forward contract for taking the benefit of hedging purposes.
If the forward rate is less than the expected future spot rate the currency should purchase and sell it in future at forward premium.A forward premium is a condition at which forward future price of currency is greater than the spot price.

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